Telefonica is gunning for carrier billing, publicly declaring that its UK operation, O2, will give merchants a bigger cut, and signing a deal integrating its BlueVia API with Telenor for cross-operating billing. The increased cut should encourage more transactions to be processed through the mobile-phone billing platform, as O2 …
how much is "less"
It all hinges on what O2 will take. it needs to a ~2%. This is typically what credit card companies (with all the extras you mention) charge.
But being a mobile operator is a 20% margin business. If it took off (ha!) the gross margin of the whole of O2 would take a dive.
Re: how much is "less"
Margin is calculated on what it costs you to deliver a service - so a 20-30% margin ought to be perfectly possible for transaction processing (which should cost a few £0.01 to deliver at volume) when billed at <2% of gross transaction value.
£5.00 spend @ 2% = 10p, if cost to process is 8p then thats 20% margin.
The trick is volume as you need a lot of transactions to split the depreciation of your highly expensive data centre accross in order to reduce your cost per transaction.
Credit / debit cards are generating well in excess of tens of millions of transactions per day - phone operator based payments not so much, hence higher cost per transaction.
Hmm, Bango are the chumps who ran the billing system to "authenticate" O2's ridiculous "over 18" blocks on mobile web access.
The same people who thought, for the first 24 hours of said system's operation, that it was perfectly acceptable to send credit card numbers, including CCV's, via plain text over non-secured connections.
You'll forgive me if I don't seem terribly keen to put money thought them.
... how all that fancy schmancy tech invariably ends up costing the punter more, not less. Plus, every single payment "solution" bar plain cash is incredibly one-sided and involves an indecent amount of middle men.
If you want to own the mobile payment market, you provide a good voice and data pipe for your customers and tack payments on as an extra. For PAYG charge a nominal sum (say the price of an sms, which really shouldn't be more than half a cent these days) for sending, and nothing at all for receiving. The convenience of the service offered will mean the punters will stay and so merchants will want a hook-up too. Since everybody on the platform should be a first-class citizen, a simple contract or PAYG will do for the merchant, too. The operator doesn't get as juicy a cut, but since the days of that are pretty much over these days anyway, sheer volume will have to do. And for that, the service has to be genuinely useful, which is quite different from "fancy". Oh, and you should be able to transfer value without having to tack your name onto it, too.
Since none of that is happening, I would surmise that the operators still see their clients as sheep to be fleeced. And you can see it in the way they try to force introduction of more fleecing tools the punters frankly don't see the point of. And the technological savvy among them unanimously decide to steer well clear of.
Payforit commercial clarification
To be clear, Payforit is not a commercial model, but a standardized user experience for mobile payments across all UK networks. Therefore whether or not the costs of individual operator's terms of billing work (or not) for music or any other product category with a fixed cost is not a function of Payforit, but of the terms of business each operator chooses to offer. Clearly, lower transaction costs / higher payout rates open up the market to more products and grows the revenue opportunity for operator billing.